The Monetary Policy Committee of the Central Bank of the Republic of Turkey (CBRT), chaired by Central Bank President Fatih Karahan, convened.
It was decided at the meeting to keep the policy rate at 45 percent following an eight-month increase cycle.
In the press release regarding the bank's interest rate, the following was noted: "In January, the main trend of monthly inflation rose as a result of time-dependent price and wage updates specific to the first month of the year, and headline inflation recorded a limited increase as forecasted in the inflation forecast path. Indicators for the near term suggest that the balancing in domestic demand continues. This balancing process is strong in consumer goods and gold imports, but slower than expected in other consumer expenditures indicators. In addition, rigidity in service prices, geopolitical risks, and food price inflation are keeping inflation pressures alive. The Committee will closely monitor the alignment of inflation expectations and pricing behaviors with forecasts, as well as the effects of wage increases on inflation.
External financing conditions, the level of reserves, improvement in the current account balance, and demand for Turkish lira assets continue to contribute to exchange rate stability and the effectiveness of monetary policy. The steadfast stance in monetary policy will continue to contribute to the process of real appreciation of the Turkish lira, one of the main elements of disinflation.
The Committee has assessed that the current level of the policy rate will be maintained until a significant and permanent decrease is achieved in the main trend of monthly inflation and inflation expectations approach the targeted range. In case of a significant and permanent deterioration in the inflation outlook, the monetary policy stance will be tightened.
The Committee will continue to implement macroprudential policies that are conducive to maintaining the functionality of the market mechanism and macro-financial stability. In this framework, the monetary transmission mechanism will be supported in case of developments beyond the expected in credit growth and deposit interest rates. Liquidity developments will be closely monitored to support monetary tightening, and sterilization tools will be effectively utilized.
The Committee will determine monetary and financial conditions to achieve a significant reduction in the main trend of inflation and to reach the target of 5 percent in the medium term, taking into account the delayed effects of monetary tightening. Indicators of inflation and its main trend will be closely monitored, and the Committee will decisively use all available instruments in line with its primary objective of price stability."
